Ongoing economic uncertainty and geopolitical volatility are making wealth management more daunting for investors, fueling changes in preferences and expectations through greater demand for advice and virtual advisory experiences, as well as openness to working with multiple providers, a new study by EY found.

The research, which polled more than 2,600 wealth management clients based in 27 key markets around the world, sought to examine shifting investor views and explore the implications of the increasing volatile market environment on clients in different regions, of different ages and of differing levels of wealth.

Findings of the research, which were shared in a full report, show that volatility and complexity are having a profound impact on investors’ needs and behaviors, driving demand for additional advice, personalization, as well as virtual experiences.

Competition ramps up

Clients of all types are seeking out additional advice (33%) in response to market volatility, and many are open to working with new providers (44%). Of the investors surveyed, 14% are planning to add a new provider, 21% are looking to move money to another provider and 9% plan to switch altogether over the next three years.

Clients’ appetite to work with or switch providers, Source: 2023 Global Wealth Research Report, EY

A research into the use of wealth management providers in the past, present and future revealed that every category of wealth firm will have opportunities to capture new clients moving forward.

Across all categories, customers shared intent to increase usage in the coming years, though fintech companies and digital assets trading platforms are expected to witness the strongest growth.

In 2023, 9% and 11% of respondents indicated using a fintech provider and a digital assets/crypto trading platform, respectively. Over the next three years, the number of clients working with fintech companies is expected to double to 18%, while penetration of digital assets trading platforms is projected to increase by four percentage points to 15%.

Use of wealth management providers in the past, present and future, Source: 2023 Global Wealth Research Report, EY

Adoption of digital assets among retail investors has increased in virtually every markets since 2019, with consumers often mentioning growth prospects as well as the desire to support blockchain development as their top motivations for owning crypto. In Switzerland, the penetration of crypto more than doubled between 2019 and 2023, rising from 10% to 21%, data from the Statista’s Consumer Insights show.

Emerging markets, however, recorded the strongest growth. In India, the penetration of crypto increased by more than threefold, rising from 8% in 2019 to 27% in 2023. Uptake was also strong in Indonesia where 29% of respondents indicated owning or using crypto in 2023, up from just 11% in 2019.

Share of respondents who indicated they either owned or used cryptocurrencies from 2019 to 2023, Source: Statista, June 2023

Demand for virtual interactions on the rise

Findings of the EY study also reveal that engagement preferences are changing too, with customers showing greater appetite than before for virtual interactions and personalized products and services. In the 2021 EY survey, just 12% of respondents identified virtual consultations as their preferred channel for advice, a figure that now stands at 46%.

Channel preferences differ depending on the type of interaction. For most investment advice activities, respondents cited virtual advisor interactions enabled by phone or video as their channel of choice (46%). Advisory (52%) and discretionary (57%) clients showed the strongest preferences for advisor-led virtual interactions.

Preferred engagement channel for investment management and advice, Source: 2023 Global Wealth Research Report, EY

At the same time, results of the study also show that physical contact as well as advisor accessibility and responsiveness are essential to clients. The majority of respondents (71%) said they wanted regular or periodic contact from their advisor, and 84% said they valued swift responses to their inquiries.

Face-to-face interaction is particularly important during onboarding. 48% of respondents identified in-person interaction as their preferred engagement channel during account opening. Customers cited being introduced to the wealth management team (68%) and personalized welcome experiences (60%) as important or very activities during onboarding.

At the same time, customers also value a clear and easy onboarding process, including the ability to track their account status digitally (69%), clear onboarding steps (72%) and the ability to share account setup documents digitally (69%).

These findings suggest that a digitally-led onboarding experience is important for clients but that human support remains critical.

Account opening activities most important to clients, Source: 2023 Global Wealth Research Report, EY

Featured image credit: Edited from Freepik